Uranium glows again

URANIUM stocks have had their best day since the Japanese nuclear crisis in March, with Prime Minister Julia Gillard's support for sales to India adding to positive developments for the sector in overseas markets.

Share price rises of more than 10 per cent were common across the Australian uranium sector, with the value of smaller stocks such as Deep Yellow and Peninsula Energy increasing more than 20 per cent in one day.

Ms Gillard's pledge to lobby Labor colleagues to overturn the ban on sales to India follows strong competitive tension for takeovers in the uranium sector and last Friday's 7 per cent rise in the global price.

Paladin Energy boss John Borshoff said selling to India would be a ''much needed move'' given many other nations were already doing so. Paladin shares rose 5? to $1.66, meaning the stock has risen close to 18 per cent over the past week.

Toro Energy shares rose by more than 10 per cent to 8.5?, and chief executive Greg Hall said the biggest impact of such a change would be to encourage Indian investment in Australian uranium stocks.

BHP Billiton could benefit significantly if sales to India are legalised, given the company's plans to develop the world's biggest uranium mine at Olympic Dam in South Australia. BHP said it may review its ban on selling uranium to India if the Australian government were to change its policy and safeguards were in place.

UBS analyst Tom Price said just 2 per cent of the uranium sold globally was bought by India, but the nation's demand was expected to grow at 5 per cent each year between now and 2020.

The increasingly competitive scramble for control of Canadian company Hathor Exploration was also boosting confidence in the sector yesterday. Hathor has a massive uranium prospect in Canada and is the focus of a takeover bidding war between Rio Tinto and Cameco.

Cameco topped Rio's most recent bid on Monday, in a move that values Hathor almost 70 per cent higher than the stock was fetching in August.

There are expectations Rio may respond by improving its offer for Hathor, and industry pundits say that bidding war, coupled with similar competitive tension for control of Perth miner Extract Resources, shows the big companies have a positive long-term view of uranium.

Despite the burst of optimism for the sector, all the uranium pure-plays mentioned above are still worth dramatically less than they were before the Fukushima nuclear disaster.